Partnership- A very simple yet strong term. Partnership firm registration is done on many bases in India. It can be on a friendly basis or it can be a formal basis. Partnership refers to a relationship when 2 or more people decide to share the profits of a business carried on by them all or any of them acting for all in the Corporate world. It’s generally done in legal terms and conditions. The percentage of ownership varies on certain factors. Thus, it allows joint ownership of a business. There are particular rules and regulations that have to be followed while starting a Partnership. Registering a partnership is not mandatory under the Indian Partnership Act, 1932 but only Maharashtra has made their registration mandatory. Further, a partnership can be registered at any time i.e. even many years after formation. Registering or not registering a partnership has its own benefits, but like a coin that has two sides, it definitely has its own limitations too. Described below in detail is how a partnership firm works and how can you register for it in India.
The partnership is relatively simple to start however, there are specific conditions and restrictions to be followed in setting them up. Also, consent of all the partners in a partnership firm is required in fundamental matters such as the admission of new partners, dissolution of the firm, conversion of the firm, etc. according to the Indian Partnership Act, 1932. A majority in other matters and there should be sharing of all the profits or losses made in the enterprise. It also states that there has to be a legal contract that is particularly more rules while setting up a Partnership firm, clearly stated in the Partnership Act and they should be followed strictly to reduce any severe actions made by authorities towards your firm.
For Partnership Registration, you must agree on a business name and then make a partnership deed. A partnership deed is a document stating the respective rights and obligations of the partners and it should be written and not oral to be valid. The terms can be varied to suit the interests of the partners and can even be made contrary to Partnership Act but if the Partnership Deed is silent on any area, then the provisions of the Act will apply. The registration of the partnership firm is not compulsory according to the Indian Partnership Act, 1932, however, unregistered partnership firms cannot enjoy the advantages of the Indian Partnership Act, 1932. They are:
- Partner Cannot sue firm: A partner cannot sue the firm for enforcing any rights in an unregistered partnership firm under the Indian Partnership Act, 1932
- Cannot claim Setoff in a dispute with another party.
- The partnership firm cannot sue other parties whereas the other parties would be able to sue the firm irrespective of registration.
Documents for Partnership Firm
The following documents are needed for the registration of a Partnership firm:
(a) Statement in Form 1 with the mentioned fees
(b) A notarized True print of the Partnership Deed stating the following:
- nature of business of the firm
- The place or principal location of business of the firm
- the names of any other area where the firm carries on business
- the date when each partner joined the enterprise
- Full name and permanent addresses of the partners
- Duration of the firm.
(c) Evidence of ownership or rent or lease of the location of your business.
The Statement must be signed and also be verified by affidavit in the prescribed manner by all the partners of the firm.
All this should be submitted to the Registrar of the firms of the state. A certificate of Registration is then issued by the Registrar. A copy should be given to all the partners. Further, a separate registration is to be done in order to avoid any future issues with the Income Tax department and must obtain a PAN card and a bank a/c under the name of Partnership firm and a bank account.
Partnership registration can be done with Legalraahi.